MERIDEN � A motorist driving along Hanover Street did a double take and renegotiated the one-way street to confirm what he thought he just saw. There was Castle Bank & Trust Co. President and Chief Executive Officer Lawrence McGoldrick in shirtsleeves cutting the grass at the Hanover Street headquarters. The driver shook his head in disbelief, rolled down his window and said he�d never seen a bank president mow a lawn before. McGoldrick grinned. Mowing the lawn is classic McGoldrick � a community figurehead who admits he�s cheap, is known to change the office light bulbs and haggles with former executives for deals on used office furniture. But it was also McGoldrick who attended the groundbreaking for the new home of Lyons Tool and Die Co. in June 2001. There, three generations of Lyonses met with City Councilor Stephen Zerio, McGoldrick and Castle Bank then-Senior Vice President Richard Dawson at the Research Parkway construction site where work on the foundation began. It was also McGoldrick and Senior Vice President Daniel DeRosa standing in the back of the Latin-American Club hall Wednesday as 49 Hispanic community members graduated from a small-business training class. Castle Bank helped sponsor the 10-week program. Bank officers don�t typically attend groundbreakings or meet with clients on construction sites, but to Castle Bank and McGoldrick, their presence at customer milestones fulfills a community bank�s mission, the same need people shared with McGoldrick when the idea to start a hometown bank hit him seven years ago. "They all had stories about a banker who helped them out; who wasn�t just a lender, he was a counsel. These were people who don�t have a CFO; their banker was their counselor. I saw that as what would differentiate Castle Bank," McGoldrick said. "Community banks focus their resources on the community, bigger banks look at the world. Meriden and Central Connecticut is our world. "The Lyons deal bears out McGoldrick�s philosophy. In early 2001, McGoldrick went to city officials to see if they could help keep a growing tool and die business from leaving the city. Lyons had outgrown its Research Parkway home and wanted to expand, but without more funding, the twenty something-year-old company faced possible relocation outside the city. Zerio, who is chairman of the City Council�s Economic Development, Housing and Zoning Committee, remembers McGoldrick�s persistence in keeping the business in the city. His bank had agreed to lend Lyons $1.5 million for the expansion, and the banker was asking the city to kick in anything it could. Zerio lobbied the council and secured a $500,000 low-interest Manufacturers Assistance Loan for Lyons. On June 1, 2001, Lyons Tool & Die Co. began construction of the new building across the street from its former home, and twice the size. That was the first time Castle Bank and the city worked together to help a business grow and is exactly the type of deal McGoldrick envisions will help Meriden prosper. "We hope this is a model of cooperation between the private and public sectors to encourage economic development,�� McGoldrick said at the time. "This is a great local company that I think both the city and the bank really feel is important." "And they had the option to leave the city," Zerio said at the time. "So, I�m really happy with the partnership and financing." Today, Zerio points to the deal as an example of teamwork between business, community and a bank. It�s been five years since Castle Bank organizers raised the $5.5 million needed to open its doors. Never mind that many thought McGoldrick and other organizers would have a better chance of finding gold in the hills surrounding Castle Craig than in finding it in a new community bank. But McGoldrick, a city native who has worked for Merrill Lynch and Bank of Boston, was convinced that Meriden�s economic woes began when the last of the hometown banks closed in the mid-1990s. McGoldrick remembers nine hometown banks as a child growing up here. "We feel Castle Bank can be an engine for economic development," McGoldrick said. "But the community bank can�t survive if the community doesn�t support it. It�s a two-way street." Despite the numbers of large bank consolidations and mergers recently, Castle Bank was one of three community banks that appeared on the local scene in 1999 and have since built a steady clientele of small and medium-sized businesses and consumers. That local bank activity is reflected nationally. According to the Independent Community Bankers of America, community banks are defined as independent, locally owned and operated institutions with assets ranging from less than $10 million to a few billion dollars. There are more than 8,800 community banks and savings and loans, with 39,094 locations throughout the U.S. The Northeast is home to only 9 percent of them. While the total number of community banks in the U.S. is decreasing with consolidation, new community banks are proliferating. In fact, 1999 witnessed the highest number of community banks formed in nearly a decade with 268 new charters reported, according to the ICBA. Valley Bank in Bristol Robert Messier is president and chief executive officer of Valley Bank, headquartered in Bristol with a branch in Terryville and another one in Bristol on the horizon. With business split 80 percent commercial and 20 percent consumer products, the bank�s growth over the past five years has averaged 25 percent a year, as has the bank�s loan growth. Messier credits Valley Bank�s success with timing and community need. "When we put the bank together, we replaced three hometown banks that disappeared over a five-year period," he said. "We�re getting a lot of those customers." There will always be a need for both community banks and the larger banks, but the advantage of the community bank over the mega-banks is its familiarity with the customers and its ability to make decisions and process applications quickly. Customers "want to talk to someone face to face who can make a decision in a short period of time. And we can do that," Messier said. "They don�t want to talk to someone in Boston or Waterbury." "We know the families and a lot of inside stories that are good and bad," said McGoldrick. Larger banks are invisible to customers, but have more money available to them for the high-end financing and can handle international transactions, Messier said, adding that community banks can also handle many of those services. But as small and medium-size businesses grow, they no longer require the large loans and can rely on the community bank to handle their money. Low interest rates have cut deeply into profit margins at both banks, but they�ve held on and expect turnarounds soon. With 30 percent of its loans at variable interest rates, a rate hike can help Valley Bank considerably. After five years in business, Valley Bank has accrued a $69 million portfolio with 11.5 percent in residential mortgages. Messier, who has known McGoldrick from bank CEO associations, values his decision making and ability to lead Castle Bank as the economy rebounds. "Larry is a good banker," he said. Despite an $86,378 drop in earnings caused by low interest rates and rapid repayments, Castle Bank for its part has shown growth in non-interest income, excluding securities gains, increasing 46 percent to $214,265. According to Castle Bank�s annual report, loan growth increased the bank�s portfolio 37 percent to $32,370,011. Deposits increased 13.3 percent and the bank continues to add new products and services every year. The bank employs 16 full-time people. "We got off to a good start, despite the economy in the past two or three years," said Sherwin Borsuk, vice chairman of the board. "We made good loans to good small businesses that were having a difficult time getting loans from larger banks. For many of us directors, that was the need to open a local bank." Borsuk said shareholders aren�t too concerned about the setback thanks to the rebounding economy. "We look forward to growing along with Meriden," Borsuk said. Building for the future Castle Bank recently entered into a partnership with Altara Mortgage Corp. to offer residential mortgages to customers. It has also introduced a full line of Savings Bank Life Insurance products. In addition to a debit card, the bank now offers credit cards for both business and retail customers and is open from 9 a.m. to 4 p.m. on Saturday. It also offers access to ATM machines in 50 Connecticut towns and cities. The machines, located primarily in convenience stores, are free of charge to all Castle Bank customers. The bank opened its branch office on East Main Street in August 2001, and a branch in Wallingford is next. It is also poised to start offering Internet banking. "We have to restructure ourselves geographically," McGoldrick said. "You have to have the lion�s share of the business. People can�t take us for granted." McGoldrick said the recent merger of New Haven Savings Bank with two other banks into New Alliance Bank is bothersome to community banks that did not form to be consolidated or acquired by larger banks. "What we�re trying to build here is a community bank that can last," he said. "When I see a bank that has successfully done it and then gives it away, it�s upsetting. "We want to build our financial strength and ability to pay a return to our shareholders and continually add products and services," McGoldrick said. "The only thing that differentiates us is the people. It�s the relationships that are going to make you successful." Like most community banks, Castle Bank�s board of directors and top administrators serve on a variety of local boards and community organizations. McGoldrick, who says the city "needs a shot of self-esteem," sits on the board of directors at MidState Medical Center, the Meriden Economic Development Corp. (MEDCO) and the Boys and Girls Club of Meriden. Others at his bank are active in the Greater Meriden Chamber of Commerce, the United Way, the YMCA, Rotary Club and more. The bank�s community involvement is something not unnoticed by city officials. Meriden Economic Development Director Peggy Brennan said the city is lucky to have a community bank that works with its customers. "I work with many local businesses who do business with Castle because Larry McGoldrick and his banking professionals are always readily available to meet with them and help them grow or build their business in Meriden," Brennan said. "Larry and his Castle Bank representatives are at community functions, support local events, sit on economic development committees and local boards. I have a friend and a local bank president always willing to help and sort through problems and solutions. This is not the case in other towns and cities that do not have a community bank." But the organization and daily operations of a community bank took a toll on McGoldrick two and a half years after he opened the business. He started having chest pains, and although heart troubles ran in his family, he knows his stress level was a contributing factor. He underwent quadruple bypass surgery and returned to the bank. McGoldrick predicts the bank will soon outgrow its headquarters at the former Dime branch and being in the city�s flood plain will eventually force it to relocate. But as much as he likes the character of the old brick foundry with its winter view of Castle Craig, he�s eager to expand. McGoldrick reflects often on Theodore Roosevelt�s challenge that the man who takes no risk, wins no rewards and that those who sit back in judgment while doing nothing, never lived. He�s always proud when he�s accomplished something, but McGoldrick believes success is not starting a bank, but laying a solid foundation to build on. "Every day you try to do better," he said. "The future is probably more important than the past."

Sunday, May 30, 2004

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